VANCOUVER, BRITISH COLUMBIA--(Marketwired - Oct 26, 2015) - West Fraser Timber Co. Ltd. (TSX:WFT) reported earnings of $56 million or $0.67 basic earnings per share on sales of $1,044 million in the third quarter of 2015. These results compare with previous periods as shown in the table below.

Adjusted EBITDA, Adjusted earnings and Adjusted basic EPS as described in this News Release reflect the adjustments described in the tables referred to in the section titled "Non-IFRS Measures" on page 13 of our 2015 third quarter Management's Discussion & Analysis.

($ millions except earnings per20152014
share ("EPS"))Q3Q2YTDQ3YTD
Sales 1,044 1,029 3,087 1,030 2,892
Adjusted EBITDA1 82 72 327 167 464
Operating earnings 88 18 231 111 323
Earnings 56 14 119 70 216
Basic EPS ($) 0.67 0.17 1.43 0.83 2.54
Adjusted earnings1 38 13 151 94 244
Adjusted basic EPS ($)1 0.46 0.16 1.81 1.12 2.86
1. In this News Release, reference is made to Adjusted EBITDA, Adjusted earnings and Adjusted basic EPS (collectively "these measures"). We believe that, in addition to earnings, these measures are useful performance indicators. None of these measures is a generally accepted earnings measure under International Financial Reporting Standards ("IFRS") and none has a standardized meaning prescribed by IFRS. Investors are cautioned that none of these measures should be considered as an alternative to earnings, EPS or cash flow, as determined in accordance with IFRS. As there is no standardized method of calculating any of these measures, our method of calculating each of them may differ from the methods used by other entities and, accordingly, our use of any of these measures may not be directly comparable to similarly titled measures used by other entities. Refer to the tables in the section titled "Non-IFRS Measures" on page 13 of our 2015 third quarter Management's Discussion & Analysis for details of these adjustments.

Operational Results

In the quarter our lumber operations generated an operating loss of $9 million (Q2-15 - operating earnings of $13 million) and Adjusted EBITDA of $26 million (Q2-15 - $45 million). A decline in U.S. SYP and low-grade SPF lumber prices, partially offset by a weaker Canadian dollar, was a major factor in the decreases. Increased shipments from our U.S. sawmills partially mitigated the operating earnings decline.

The panel segment, which includes plywood, LVL and MDF, experienced improved prices and generated operating earnings in the quarter of $26 million (Q2-15 - $17 million) and Adjusted EBITDA of $29 million (Q2-15 - $21 million).

Our pulp operations achieved improved production and shipments and, combined with our jointly-owned newsprint division, generated operating earnings of $14 million (Q2-15 - operating loss of $1 million) and Adjusted EBITDA of $25 million (Q2-15 - $8 million). U.S.-dollar price declines were partially offset by a weaker Canadian dollar.

Outlook

Ted Seraphim, our President and CEO, said "This quarter's results reflect the continued oversupply of lumber in key markets which was exacerbated by a sharp drop in demand from China late in the quarter. Our panel and pulp & paper segments helped offset our weak lumber results which reinforces the value of our integrated Canadian platform. We continue to go through the start up phase of many of our capital projects, particularly in the United States, and we look forward to achieving the related benefits over the next few quarters. Following the end of the quarter we announced an agreement to acquire a sawmill in Manning, Alberta and related timber harvesting rights. We're delighted to welcome the Manning team to the West Fraser family at the end of October."

Management's Discussion & Analysis ("MD&A")

The Company's MD&A is available on the Company's website: www.westfraser.com and on the System for Electronic Document Analysis and Retrieval at www.sedar.com under the Company's profile.

The Company

West Fraser is a diversified wood products company producing lumber, LVL, MDF, plywood, pulp, newsprint, wood chips and energy with facilities in western Canada and the southern United States.

Forward-Looking Statements

This Report contains historical information, descriptions of current circumstances and statements about potential future developments. The latter, which are forward-looking statements and are included under the heading "Outlook", are presented to provide reasonable guidance to the reader but their accuracy depends on a number of assumptions and is subject to various risks and uncertainties. Actual outcomes and results will depend on a number of factors that could affect the ability of the Company to execute its business plans, including those matters described in the 2014 annual Management's Discussion & Analysis under "Risks and Uncertainties", and may differ materially from those anticipated or projected. Accordingly, readers should exercise caution in relying upon forward-looking statements and the Company undertakes no obligation to publicly revise them to reflect subsequent events or circumstances, except as required by applicable securities laws.

Conference Call

Investors are invited to listen to the quarterly conference call on Tuesday, October 27, 2015 at 8:30 a.m. Pacific Time (11:30 a.m. Eastern Time) by dialing 1-800-355-4959 (toll- free North America). The call may also be accessed through West Fraser's website at www.westfraser.com.

West Fraser Timber Co. Ltd.
Condensed Consolidated Balance Sheets
(in millions of Canadian dollars, except where indicated - unaudited)
September 30 December 31
2015 2014
Assets
Current assets
Cash and short-term investments$21 $ 21
Receivables317 288
Income taxes receivable3 -
Inventories (note 3)549 586
Prepaid expenses18 12
908 907
Property, plant and equipment1,564 1,469
Timber licences516 530
Goodwill and other intangibles363 350
Other assets44 79
Deferred income tax assets72 62
$3,467 $ 3,397
Liabilities
Current liabilities
Cheques issued in excess of funds on deposit$18 $ 36
Operating loans (note 4)41 103
Payables and accrued liabilities384 411
Income taxes payable- 26
Reforestation and decommissioning obligations42 40
485 616
Long-term debt (note 4)407 354
Other liabilities (note 5)298 244
Deferred income tax liabilities153 154
1,343 1,368
Shareholders' Equity
Share capital579 587
Accumulated other comprehensive earnings139 55
Retained earnings1,406 1,387
2,124 2,029
$3,467 $ 3,397
Number of Common shares and Class B Common shares outstanding at October 26, 2015 was 82,454,827.
West Fraser Timber Co. Ltd.
Condensed Consolidated Statements of Changes in Shareholders' Equity
(in millions of Canadian dollars, except where indicated - unaudited)
July 1 to September 30 January 1 to September 30
2015 20142015 2014
Share capital
Balance - beginning of period$587 $ 596$587 $ 602
Common share repurchases(8) (7 )(8) (13 )
Balance - end of period$579 $ 589$579 $ 589
Accumulated other comprehensive earnings
Balance - beginning of period$98 $ 11$55 $ 10
Translation gain on foreign operations41 2584 26
Balance - end of period$139 $ 36$139 $ 36
Retained earnings
Balance - beginning of period$1,447 $ 1,383$1,387 $ 1,335
Actuarial loss on post-retirement benefits(40) -(31) (49 )
Common share repurchases(52) (43 )(52) (80 )
Earnings for the period56 70119 216
Dividends(5) (6 )(17) (18 )
Balance - end of period$1,406 $ 1,404$1,406 $ 1,404
Shareholders' Equity$2,124 $ 2,029$2,124 $ 2,029
West Fraser Timber Co. Ltd.
Condensed Consolidated Statements of Earnings and Comprehensive Earnings
(in millions of Canadian dollars, except where indicated - unaudited)
July 1 to September 30 January 1 to September 30
2015 20142015 2014
Sales$1,044 $ 1,030$3,087 $ 2,892
Costs and expenses
Cost of products sold756 6822,162 1,907
Freight and other distribution costs164 144467 411
Export taxes14 -26 -
Amortization49 45141 127
Selling, general and administration28 37105 110
Equity-based compensation(55) 11(45) 14
956 9192,856 2,569
Operating earnings88 111231 323
Finance expense(8) (6 )(23) (20 )
Exchange loss on long-term debt(25) (16 )(52) (17 )
Fair value adjustment to power agreements (note 8)(17) -(29) -
Other income (note 9)20 1333 19
Earnings before tax58 102160 305
Tax provision (note 10)(2) (32 )(41) (89 )
Earnings$56 $ 70$119 $ 216
Earnings per share (dollars) (note 11)
Basic$0.67 $ 0.83$1.43 $ 2.54
Diluted$0.05 $ 0.83$0.83 $ 2.54
Comprehensive earnings
Earnings$56 $ 70$119 $ 216
Other comprehensive earnings
Translation gain on foreign operations41 2584 26
Actuarial loss on post-retirement benefits 1(40) -(31) (49 )
Comprehensive earnings$57 $ 95$172 $ 193
1. Net of tax recovery of $14 million for the three months ended September 30, 2015 (three months ended September 30, 2014 - $nil million) and $12 million for the nine months ended September 30, 2015 (nine months ended September 30, 2014 - $17 million).
West Fraser Timber Co. Ltd.
Condensed Consolidated Statements of Cash Flows
(in millions of Canadian dollars, except where indicated - unaudited)
July 1 to September 30 January 1 to September 30
2015 20142015 2014
Operating activities
Earnings$56 $ 70$119 $ 216
Adjustments
Amortization49 45141 127
Finance expense8 623 20
Exchange loss on long-term debt25 1652 17
Fair value adjustment to power agreements17 -29 -
Tax provision2 3241 89
Income taxes paid(8) (7 )(62) (54 )
Post-retirement expense23 1651 41
Contributions to post-retirement benefit plans(23) (13 )(44) (42 )
Other(14) (27 )(14) (25 )
Changes in non-cash working capital
Receivables7 15(19) (22 )
Inventories(10) 552 32
Prepaid expenses10 10(6) (7 )
Payables and accrued liabilities(53) 69(34) 42
Cash flows from operating activities89 237329 434
Financing activities
Proceeds from (repayment of) operating loans6 (84 )(69) 45
Finance expense paid(1) (1 )(12) (12 )
Dividends(5) (6 )(17) (18 )
Common share repurchases(60) (50 )(60) (93 )
Other(1) (1 )(1) (1 )
Cash flows from financing activities(61) (142 )(159) (79 )
Investing activities
Acquisitions- (1 )- (203 )
Additions to capital assets(51) (107 )(169) (321 )
Government assistance- -- 13
Other(1) 25 (9 )
Cash flows from investing activities(52) (106 )(164) (520 )
Change in cash(24) (11 )6 (165 )
Foreign exchange effect on cash5 712 10
Cash - beginning of period22 11(15) 162
Cash - end of period$3 $ 7$3 $ 7
Cash consists of
Cash and short-term investments$21 $ 18
Cheques issued in excess of funds on deposit(18) (11 )
$3 $ 7

West Fraser Timber Co. Ltd.

Notes to Condensed Consolidated Interim Financial Statements

(figures are in millions of dollars, except where indicated - unaudited)

1. Nature of operations

West Fraser Timber Co. Ltd. ("West Fraser", "we", "us" or "our") is a diversified wood products company producing lumber, LVL, MDF, plywood, pulp, newsprint, wood chips and energy with facilities in western Canada and the southern United States. Our executive office is located at 858 Beatty Street, Suite 501, Vancouver, British Columbia. West Fraser was formed by articles of amalgamation under the Business Corporations Act (British Columbia) and is registered in British Columbia, Canada. Our Common shares are listed for trading on the Toronto Stock Exchange under the symbol WFT.

2. Basis of presentation and statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board and using the same accounting policies and methods of their application as the December 31, 2014 annual financial statements. These condensed consolidated interim financial statements should be read in conjunction with our 2014 annual financial statements.

3. Inventories

Inventories at September 30, 2015 were written down by $37 million (June 30, 2015 - $22 million; December 31, 2014 - $5 million; September 30, 2014 - $6 million) to reflect net realizable value being lower than cost.

4. Long-term debt and operating loans

Long-term debt

September 30,
2015		 December 31,
2014
US$300 million senior notes due October 2024; interest at 4.35%$400 $ 348
US$8 million note payable due October 2020; interest at 2%9 9
Note payable due in installments to 2020; interest at 5.5%2 2
411 359
Deferred financing costs(4) (5 )
$407 $ 354

The fair value of the long-term debt is $397 million (December 31, 2014 - $354 million) based on rates available to us at the balance sheet date for long-term debt with similar terms and remaining maturities.

Operating loans

We have $583 million in revolving lines of credit of which $41 million (net of deferred financing costs of $3 million) were drawn as at September 30, 2015 (December 31, 2014 - $103 million, net of deferred financing costs of $3 million).

Our revolving lines of credit consist of a $500 million revolving credit facility, two demand lines of credit totalling $75 million dedicated to letters of credit, and an $8 million demand line of credit dedicated to our jointly owned newsprint operation. The revolving credit facility maturity date was extended to September 30, 2020 subsequent to the end of the quarter. Interest on the facilities is payable at floating rates based on Prime, U.S. base, Bankers' Acceptances or LIBOR at our option. As at September 30, 2015, letters of credit in the amount of $55 million have been issued under these facilities.

All debt is unsecured except the $8 million joint operation demand line of credit, which is secured by that joint operation's current assets.

5. Other liabilities

September 30,
2015		 December 31,
2014
Post-retirement (note 6)$179 $ 129
Reforestation71 71
Decommissioning25 23
Other23 21
$298 $ 244

6. Post-retirement benefits

We maintain defined benefit and defined contribution pension plans covering a majority of our employees. The defined benefit plans generally do not require employee contributions and provide a guaranteed level of pension payable for life based either on length of service or on earnings and length of service, and in most cases do not increase after commencement of retirement. We also provide group life insurance, medical and extended health benefits to certain employee groups.

The status of the defined benefit pension plans and other retirement benefit plans, in aggregate, is as follows:

September 30,
2015		 December 31,
2014
Projected benefit obligations$(1,518) $ (1,464 )
Fair value of plan assets1,352 1,354
Impact of minimum funding requirement(6) (5 )
$(172) $ (115 )
Represented by
Post-retirement assets$7 $ 14
Post-retirement liabilities (note 5)(179) (129 )
$(172) $ (115 )

The significant actuarial assumptions used to determine our balance sheet date post-retirement assets and liabilities are as follows:

September 30,
2015		 June 30,
2015		 December 31,
2014
Discount rate4.00% 4.00% 4.00%
Future compensation rate increase3.50% 3.50% 3.50%

The change in the discount rate on obligations and the difference between the actual rate of return and the discount rate on plan assets generated an actuarial loss on post-retirement benefits, included in other comprehensive earnings, as follows:

July 1 to September 30 January 1 to September 30
2015 20142015 2014
Actuarial loss$(54) $ - $(43) $ (66 )
Tax recovery14 -12 17
$(40) $ - $(31) $ (49 )

7. Share Capital

During this quarter we repurchased 1,078,856 Common shares under our normal course issuer bid (NCIB) program, which expired September 16, 2015, at an average price of $55.57 per share for a total cost of $60 million.

On September 15, 2015 our Board of Directors authorized the renewal of our NCIB to repurchase for cancellation up to 4,000,000 Common shares or approximately 5% of our issued and outstanding Common shares. The NCIB will expire September 16, 2016.

8. Power agreements

Effective October 1, 2014 certain power agreements were classified as derivative financial instruments and are recorded at fair value at each balance sheet date, (see note 12 to our 2014 annual financial statements). The fair value adjustment for the nine months ended September 30, 2015 resulted in an unrealized loss of $29 million (unrealized loss of $17 million for the three months ended September 30, 2015 and an unrealized loss of $2 million for the three months ended December 31, 2014).

9. Other income

July 1 to September 30 January 1 to September 30
2015 20142015 2014
Foreign exchange gain$14 $ 10$28 $ 10
Other6 35 9
$20 $ 13$33 $ 19

10. Tax provision

The tax provision differs from the amount that would have resulted from applying the Canadian statutory income tax rates to earnings before tax as follows:

July 1 to September 30 January 1 to September 30
2015 20142015 2014
Income tax expense at statutory rate of 26% (2014 - 26%)$(15) $ (26 )$(42) $ (79 )
Non-taxable amounts9 (4 )4 (4 )
Rate differentials between jurisdictions and on specified activities3 (3 )4 (6 )
Increase in Alberta provincial tax rate- -(7) -
Other1 1- -
Tax provision$(2) $ (32 )$(41) $ (89 )

Effective June 18, 2015, the government of Alberta enacted a change in the provincial tax rate from 10% to 12%. This new tax rate increased our tax provision by $7 million dollars in the second quarter.

11. Earnings per share

Basic earnings per share is calculated based on earnings available to Common shareholders, as set out below, using the weighted average number of Common shares and Class B Common shares outstanding.

Diluted earnings per share is calculated based on earnings available to Common shareholders adjusted to remove the actual share option expense (recovery) charged to earnings and after deducting a notional charge for share option expense assuming the use of the equity-settled method, as set out below. The diluted weighted average number of shares is calculated using the treasury stock method. When earnings available to Common shareholders for diluted earnings per share are greater than earnings available to Common shareholders for basic earnings per share, the calculation is anti-dilutive and diluted earnings per share are deemed to be the same as basic earnings per share.

July 1 to September 30 January 1 to September 30
2015 20142015 2014
Earnings
Basic$56 $ 70$119 $ 216
Share option expense (recovery)(52) 8(46) 9
Equity settled share option adjustment(1) -(3) (2 )
Diluted$3 $ 78$70 $ 223
Weighted average number of shares (thousands)
Basic82,906 84,20283,320 85,094
Share options1,207 1,4291,352 1,456
Diluted84,113 85,63184,672 86,550
Earnings per share (dollars)
Basic$0.67 $ 0.83$1.43 $ 2.54
Diluted$0.05 $ 0.83$0.83 $ 2.54

12. Segmented information

Pulp &Corporate
LumberPanelspaper& otherTotal
July 1, 2015 to September 30, 2015
Sales
To external customers$668$146$230$-$1,044
To other segments292--
$697$148$230$-
Operating earnings before amortization$26$29$25$57$137
Amortization(35)(3)(11)-(49)
Operating earnings(9)26145788
Finance expense(5)(1)(2)-(8)
Exchange loss on long-term debt---(25)(25)
Fair value adjustment to power agreements(1)(1)(15)-(17)
Other income8111-20
Earnings before tax$(7)$25$8$32$58
July 1, 2014 to September 30, 2014
Sales
To external customers $ 688 $ 143 $ 199 $ - $ 1,030
To other segments 25 2 - -
$ 713 $ 145 $ 199 $ -
Operating earnings before amortization $ 131 $ 29 $ 9 $ (13 ) $ 156
Amortization (30 ) (4 ) (11 ) - (45 )
Operating earnings 101 25 (2 ) (13 ) 111
Finance expense (4 ) - (2 ) - (6 )
Exchange loss on long-term debt - - - (16 ) (16 )
Other income 6 1 6 - 13
Earnings before tax $ 103 $ 26 $ 2 $ (29 ) $ 102
Pulp &Corporate
LumberPanelspaper& otherTotal
January 1, 2015 to September 30, 2015
Sales
To external customers$1,998$409$680$-$3,087
To other segments826--
$2,080$415$680$-
Operating earnings before amortization$188$76$63$45$372
Amortization(100)(10)(30)(1)(141)
Operating earnings88663344231
Finance expense(14)(3)(6)-(23)
Exchange loss on long-term debt---(52)(52)
Fair value adjustment to power agreements(1)(3)(25)-(29)
Other income14118-33
Earnings before tax$87$61$20$(8)$160
January 1, 2014 to September 30, 2014
Sales
To external customers $ 1,886 $ 386 $ 620 $ - $ 2,892
To other segments 73 6 - -
$ 1,959 $ 392 $ 620 $ -
Operating earnings before amortization $ 344 $ 53 $ 71 $ (18 ) $ 450
Amortization (83 ) (11 ) (32 ) (1 ) (127 )
Operating earnings 261 42 39 (19 ) 323
Finance expense (12 ) (2 ) (6 ) - (20 )
Exchange loss on long-term debt - - - (17 ) (17 )
Other income 11 1 7 - 19
Earnings before tax $ 260 $ 41 $ 40 $ (36 ) $ 305

The geographic distribution of external sales is as follows1:

July 1 to September 30 January 1 to September 30
2015 20142015 2014
Canada$223 $ 257$669 $ 684
United States588 5121,672 1,476
China140 175470 451
Other Asia76 62224 208
Other17 2452 73
$1,044 $ 1,030$3,087 $ 2,892
1. Sales distribution is based on the location of product delivery.

13. Subsequent event

On October 14, 2015, we announced the acquisition of a lumber manufacturing facility and the related timber harvesting rights located in Manning, Alberta. The purchase price is $66 million plus working capital and is expected to close before the end of October 2015.